Week in FX Americas – Loonie Is As Boring As It’s Data

Despite the mass fallout in commodity prices this week, the loonie has traded in a well-contained range. It has been trading like a currency that time forgot, unlike its partner in crime the AUD down-under. Even the IMF warning that the Aussie is about +10% overvalued has tried to take the edge off the Japanese housewife’s favorite commodity currency. Modest support from cross/JPY buying and a credit rating agency’s triple A-rating nod has the AUD outperforming its sister for now.

Notwithstanding the Bank of Canada holding O/N rates steady at +1% this week, outgoing Governor Carney sung more of a dovish tune – up until now he was one of the last remaining global ‘hawks’. The BoC has reduced its growth forecast for 2013 and said economic slack will persist for more than two years. Policy makers have lowered their 2013 growth forecast to +1.5% from the +2% it had predicted in January, after recent data in Canada, China and the U.S. trailed forecasts.

Friday’s Canadian data certainly supports the Bank’s change of heart. Canada’s annual inflation rose last month at a slower pace than in February (+1%, y/y vs. +1.2%), mostly on the back of a drop in gas prices. Ex-CPI climbed as expected to +1.4%, y/y. There you have it, tepid inflation is expected to be the norm in Canada for nearly two more years. Even Canadian wholesale trade remained unchanged last month, falling short of market expectations to +CAD48.8-billion. Even on a volume basis, sales were unchanged. All of this highlights the “new normal” of disappointing domestic data making it difficult to get excited about the currency in the short term.



* NZD Reserve Bank of New Zealand Rate Decision
* AUD Consumer Prices Index
* USD Durable Goods Orders
* GBP Gross Domestic Product
* JPY National Consumer Price Index
* JPY Bank of Japan Rate Decision
* JPY Bank of Japan Monetary Policy Statement
* JPY Bank of Japan Governor Kuroda Post-Statement Press Conference
* USD Gross Domestic Product

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell